Rental Property Investor · Columbia, MD · Member since 2019 · 10 posts · 1 vote
I live in MD and am focusing on properties in both MD and NC. I've owned one rental for a few years now and want to expand. I have contacted several lawyers in an attempt to set up my LLC; however, can't get any to engage.
Any and all thoughts, guidance, or references would be appreciated.
@Account Closed yes this is great advice. I was only trying to offer a suggestion of who else can help set up an entity, assuming he knows what type to set up. Or has already been legally advised as to which is best. Sometimes these forums don’t give you all of someone’s information. What are your responses to the people that tell him to set it up himself?
Your Comment: "What are your responses to the people that tell him to set it up himself?" I've been investing in real estate for 25 years and I was a loan officer. I've battled in court and prevailed each time. Yes, there have been a few times. What I have learned along the way:
1. I do use LLCs, formed by an experienced attorney.
However, umbrella insurance is sufficient for most investors starting out.
2. Lots of people never get started in real estate because they are too concerned about forming LLCs. Ironic, isn't it.
3. You don't get sued unless you have *substantial* assets.
4. A lawsuit costs each side about $50,000 and takes about a year and a half if everything goes smoothly. Lawsuits never go smoothly. The loser can appeal. The loser can file bankruptcy and get rid of the judgment after they lose the appeal.
The winner is rarely a "winner". Lawyers will not guarantee the outcome of a lawsuit no matter how "righteous" and indignant one side or the other is.
5. Umbrella insurance prevents most lawsuits. LLCs do not scare attorneys. Often the opposing attorney will name you personally as well as the LLC anyway. You have to PROVE you are separate entities and most people don't maintain an LLC properly to prove that to a judge.
6. Most lawsuits (95%) end up in a settlement rather than going to trial. Most people will settle (even f they are not wrong) in order to avoid going to trial. Personally, if the settlement isn't in my favor I take it trial. I win because I don't put myself in risky real estate deals and I disclose in writing, everything to everybody going into the transaction at the beginning.
7. People who form their own LLC may as well do their own root canal.
8. The most expensive real estate investing is done by people who never start for want of an LLC. If you never start, you never finish the race as a winner.
I would recommend a private consultation with someone like @Stanley Bronstein before deciding if you even need an LLC.
@Mike Flint you may not know this, but a lot of lawyers use online services like biz filings.com. They just charge you something over the online company’s fee for their time.
@Sam Hopkins BizFilings won't tell you how to structure it, nor will they do anything other than give you a generic operating agreement. Sometimes that's all you need. Sometimes it's not.
I just got through cleaning up 3 LLCs that someone's accountant did for them, incorrectly ...
I can go to WebMD and diagnose my own symptoms, or I can go to a doctor when it matters. Personally I choose a doctor. When I setup an LLC I have my attorney do it. I pay around a grand I figure. I also make random calls when something comes up and I get a call back. I do not go more than about a month without talking to my attorney about something or another (Maybe an LLC related item, a mutual client, a CYA item). I like forums and associates but when it comes to getting legal advice I weigh my attorneys opinion the most.
@Mike Cumbie brings up an excellent point. When you use an attorney, you quite often get service, after the sale (or extra service). I always tell people that while I'm setting up the LLC for them, they wind up getting a couple of hours of consulting during the process.
One was a referral from another investor, others I’ve found through searches of those that specialize in company formation.
By not engaging I mean that they either don’t respond to electronic requests from their website, or when I speak to them on the phone, they do not get back to me.
I am going to hang in there for this route. I’m not willing to go the online route.
Hey Mike,
BP has quite a few attorneys who would be glad to work with you. I would even say it is the preferred method to find an attorney, as most you will find in the forums are (1) active and (2) very experienced in real estate investing. If you run into issues or have more questions feel free to connect with me or tag me, too.
One was a referral from another investor, others I’ve found through searches of those that specialize in company formation.
By not engaging I mean that they either don’t respond to electronic requests from their website, or when I speak to them on the phone, they do not get back to me.
I am going to hang in there for this route. I’m not willing to go the online route.
Apologies for the double post - web browser is acting all strange today!
BP has quite a few attorneys who would be glad to work with you. I would even say it is the preferred method to find an attorney, as most you will find in the forums are (1) active and (2) very experienced in real estate investing. If you run into issues or have more questions feel free to connect with me or tag me, too.
One was a referral from another investor, others I’ve found through searches of those that specialize in company formation.
By not engaging I mean that they either don’t respond to electronic requests from their website, or when I speak to them on the phone, they do not get back to me.
I am going to hang in there for this route. I’m not willing to go the online route.
Hey Mike, you should search for ones that specialize in real estate, it is a whole different beast than general company formation. They likely don't feel comfortable forming a real estate company. A good real estate lawyer should be comfortable with that.